​Texas’ property tax system has turned property owners into renters, where government is their landlord and Texans who struggle to pay annual tax bills face confiscation of their properties. Additionally, the growth of government is harming taxpayers and the economy through higher taxes and more regulation.

The goal must be to eliminate all property taxes as they violate property rights, destroy economic growth, and disproportionately hurt the poor while being subjectively determined as they support excessive local government spending. A good place to start down that road is by ending nearly half of the property tax burden in Texas through the elimination of the school maintenance and operations (M&O) property tax, which is supported by the 18 groups in the Conservative Texas Budget Coalition. This is relatively easier than other local tax jurisdiction because the state already determines the school finance formulas and has a way to distribute funds to school districts.

Let's discuss.

First, we must identify the problem.

From 1996 to 2016, total property taxes across the state have increased by 233% while the school portion of the property tax increased by 201%. Personal income has increased by 199%; however, the best metric of the average Texan's ability to pay taxes is measured by the compounded growth of population plus inflation for that period, which was only 123%. This means that the total tax levy increased by 1.9 times more than pop+inf and the school district tax levy increased by 1.6 times more than the average Texan's ability to pay.

It's no wonder that many people are being forced out of their homes and businesses because of skyrocketing property taxes. This is a travesty what government is doing to people who are trying to leave a legacy for their kids and grandkids.

This points to the disease of the symptom of high taxes: excessive government spending. Taxes (and deficits) are always and everywhere a spending problem. To gain control of skyrocketing taxes, we must first get control of the driver of the problem in excessive government spending.

This brings us to a solution: By limiting state and local government spending, Texas can use taxpayer dollars collected at the state level to eliminate the school maintenance and operations (M&O) property tax, which is nearly half of the property tax burden, very soon. While other options have been tried in the past, like raising the homestead exemption and swapping the property tax with a reformed franchise tax ("margins tax"), those didn't permanently reduce property taxes--making those attempts a failure in the eyes of most taxpayers.

Fortunately, there are solutions.

One option is to permanently buy down the school M&O property tax with state surplus dollars until it is eliminated. Here's how:

Consider similar language as in SB 66 (2018) whereby biennial growth of general revenue-related funds (GRR) above 4% biennially would go toward buying down the school M&O property tax rate each session.

Have school districts set their tax rate each year to reduce property tax revenue by the amount of the state’s replacement funding until eliminated.

Allow school districts to only exceed this rate with the approval of more than 50% of voters in an election with at least a 20% turnout, but excess revenue raised by the vote will be recaptured by the state.

If the historical rate of GRR growth holds, Texas should be able to eliminate the school M&O property tax in 11 years (see Table below). If GRR growth is lower, then it will take longer.

In addition, to slow the growth rate of the other local tax jurisdictions, increases in city, county, and special purpose district property tax revenue will be limited to 2.5% annually to keep local governments from raising taxes to fill the gap caused by lower school district taxes. The limit can be exceeded with the approval of 50% of voters in an election with at least a 20% turnout.

This accomplishes the task of slowing state and local government spending while connecting spending less with actual tax relief with the eventual elimination of nearly half of the property tax burden in Texas.

Another option is to replace the school M&O property tax by broadening the sales tax base and limiting state and local government spending. Here's how that could work:

Consider similar language in HB 285 (2017) that would eliminate the school M&O property tax by broadening the sales tax base so the tax rate works politically and economically.

Goal should be to sufficiently broaden the base to fund elimination of the school M&O property tax without taxing the transfer of property or raising the tax rate much if at all.

Given that since Adam Smith we have known that the wealth of nations is from the formation and accumulation of capital and that property is nothing more than capital, we should not tax property. This is particularly true if we don't eliminate all property taxes because we don't want a property tax levied by cities, counties, and special purpose districts and a transfer tax imposed by school districts to ratchet around over time.

This should also include a state spending limit as noted in SB 66 that says any GRR above 4% growth biennially would go to buying down the franchise tax or sales tax along with an automatic rollback election for other local tax jurisdictions of 2.5% annually.

This accomplishes the task of slowing state and local government spending while connecting spending less with actual tax relief with the eventual elimination of nearly half of the property tax burden in Texas.

The following Table shows different sales tax bases and rates starting with taxing everything in the private sector then subtracting multiple industries measured by the Bureau of Economic Analysis as to keep from resulting in a value added tax system. In other words, we could keep the same sales tax rate of 8.25% (state portion is 6.25% and local portion is a max of 2%) with a GDP base of around $750 billion, which is about half of the private sector economy and about 67% higher than the base today.

Clearly there is no silver bullet. This will be a difficult hill to climb whichever option is chosen.

​Recently, two economists from Rice University estimated that if the buy down option or the swap option over time was chosen, the Texas economy could expand by about $12.5 billion above expected growth and private sector job creation could increase by 183,000 net jobs above expected growth soon after reform.

The Texas Model is strong, but there's more that must be done. These options would provide a clear path to more prosperity and less of a burden of holding property until you can finally own it when property taxes are eliminated entirely.

In this Let People Prosper episode, I discuss last Friday's strong U.S. jobs report. With tomorrow's election on many people's mind, this will be a key indicator that things are going well, and in many respects that's correct. But there's much more for government to do to provide an institutional framework that's conducive to economic prosperity by restraining government spending, lowering tax burdens, liberating markets in healthcare, allowing education freedom, and more.

​My hope is that classical liberalism with a good dose of fiscal conservatism will be the winner after tomorrow's election. Regardless, let's discuss the jobs report that highlighted how many people are flourishing.

Don’t miss my discussion with @AmRenConsulting on Friday's strong U.S. jobs report. Another indication that pro-growth measures of tax & reg reforms by the Trump administration continue to benefit Americans. More to do though to control govt spending by Congress and Texas Legislature.

Here are details of the strong U.S. jobs report reported by the Bureau of Labor Statistics:1) Lowest unemployment rate at 3.7% in half of a century, 2) avg 211K jobs added last 12 mos, 3) 79.7% 25-54 yr old emp-pop rate highest since March 2008–almost back to 80% before Great Recession, and 4) Private hourly earnings 3.1% best since 2009.

Interesting data tweeted by Heather Long: "New stat from data guru @hsilverb: Big businesses are paying lowest taxes in 25 years. US business in the S&P 500 paid the lowest tax rates in Q1 2018 and Q2 2018 since at least 1993 (with the exception of Q4 2008, the only negative income quarter in S&P 500 history)."

This is good news considering U.S. long had highest corporate tax rate in developed world which was simply passed along to people as businesses submit taxes but people pay them through higher prices, lower wages, and fewer jobs available. The lower rate from 35% to 21% after the Tax Cuts and Jobs Act contributes to a more pro-growth economic environment so people prosper.

Below tells the story of the net job gains in each industry, highlighting how this is an across the board gain in jobs.

Overall, a solid jobs report that indicates how we must build on the stronger institutions of the last two years by really focusing next on reining in government spending so families and civil society can flourish.

In this Let People Prosper episode, let's discuss how the best path to prosperity is capitalism and that starts with a job. The more ways that we can free up the labor market from government barriers to opportunity, such as the minimum wage and occupational licensing, the more prosperity we can all enjoy.

My recent op-ed in the Investor's Business Daily titled "Amazon's Minimum Wage Revelation: It's About Competition, Not Workers" notes the opportunity costs associated with a government-mandated minimum wage compared with a private market decision: "​Just as the company's management had the freedom to consider the firm's profitability and outlook in deciding whether to offer the higher wage, other private employers should have the same freedom. Amazon apparently thinks they shouldn't, hence the lobbying for a national mandate. Those lobbying efforts could end up doing even more harm."

My recent paper with Dr. Edward Timmons titled "Occupational Licensing: Keeping People Poor" notes the huge cost that many licenses have on people whether they be workers, consumers, or employers. We highlighted this in a recent op-ed: "Between 1993 and 2012, Texas added licensing requirements for 22 low-income occupations. Data from the Texas Department of Licensing and Regulation indicate a 460 percent increase in the number of licenses issued by the department, far surpassing the state’s population growth of 37.5 percent in that period. By making it harder for aspiring workers in Texas to enter the job market, licenses artificially inflate wages — and this means higher prices for the services provided. National estimates suggest that licensing inflates wages of professionals by about 15 percent. And this means consumers pay higher prices. In addition, individuals looking to enter a new field may be prevented from achieving their dreams."

For the sake of human flourishing, we should be doing all we can to reduce government barriers to prosperity that are socialist programs like the minimum wage (price of labor control) and occupational licensing (quantity of labor control).

In this Let People Prosper episode, let's discuss the report released by the U.S. Treasury today that notes the federal budget deficit was $779 billion, an increase of 17%, in fiscal year 2018. Again, the evidence shows that government doesn't have a revenue problem but rather a spending problem.

The largest increase in expenditures was in interest paid on the debt that increased by 23.6% to $325 billion, which is about half of what our taxpayer dollars are used to fund national defense, about one-third of what we pay for Social Security, and about 8% of total federal expenditures. A problem is that interest on the debt will continue to increase at a rapid pace because the national debt looks to continue to grow and the Federal Reserve is expected to raise their targeted federal funds rate, which is currently 2-2.25%.

Each dollar spent by the government is funded by either taxes, debt, or inflation. Each of these drain resources from the productive private sector. In other words, each dollar crowds out our ability to satisfy our desires and prosper. So, we must be able to prove without doubt that each dollar is spent more effectively by politicians than by individuals in the private sector.

Sure, there are roles for government, but, in my view, the federal government should have three main functions: national defense, justice system, and very few public goods. The total of national defense is just above $600 billion per year, so assuming the rest may run $400 billion per year, that $1 trillion federal budget would be only 25% of the $4.1 trillion spent today. Given a $1 trillion federal budget, the budget surplus would be $2.3 trillion, allowing for substantially lower taxes at every level--preferably one flat rate on final consumption.

You'll also notice that tax collections did increase even after the large Trump tax cuts indicating that the robust growth of a dynamic economy supported more revenue, even if it was less than what it could have been otherwise. Moreover, higher tax revenue negates some of the noise by the Congressional Budget Office of a $1.5 trillion deficit over a decade based on a static economic model, but we don't live in a static world and the data today are another revelation of that fact.

When we consider these details, the crowd out effect of government spending and interest on the $21.5 trillion debt, which is greater than our country's entire economic output of $20 trillion, is a huge cost to the prosperity of our nation that we must get control over before it's too late. But the cost is even greater than that because the $20 trillion GDP includes government spending, which is about 20% of GDP. If you exclude government spending, which there is good reason because it's a transfer of funds from the private sector, then the national debt would be $21.5 trillion/$16 trillion, or 134%! That's what we are looking at trying to pay back over time and is currently more than $65,000 per American.

As Reinhart and Rogoff wrote in their book This Time Is Different, there's likely a threshold when the debt-to-GDP ratio gets too high such that it hinders economic growth. I don't think that threshold is very high and that we are far above it, and moving further above it quickly unless things change.

We are seeing the benefits of the tax and regulatory reforms along with the benefits of a long--though relatively weak before recently--expansion, but these benefits will quickly expire if government spending is not restrained, trade barriers continue to be imposed, and the national debt continues to rise.

The best path to let people prosper is by getting rid of government barriers to opportunity, so we must reduce government spending.

Even its defenders say California’s prosperity is relative. The good news is that those seeking more concrete progress need only to look to the state that inspired the lone star in the upper-left corner of the Golden State’s flag: Texas.

While the Texas Model of limited government needs improving, it has already proven to be a more sustainable catalyst for job creation and economic prosperity than in California.

Although the idea of limited government may be foreign to many Californians, the Texas Model embraces the principle of reengaging institutions such as family, community, and free markets — institutions that are often undermined by an over-burdensome state.

This is not to say the government has no place in Texas; it does. Nor is this to say that those who have fallen through the cracks don’t deserve help in their times of need; they do.

Rather, the model revives the notion that government’s primary responsibility is to preserve the liberties of families and individuals, instead of attempting to supplant them. In the case of Texas, this also means allowing employers to operate with freedom and without onerous regulation.

The outcome of Texas’ limited government approach is empirically clear. In creating jobs, no one messes with Texas as one in four jobs added nationwide were created in the Lone Star State in the last decade since the Great Recession.

But it’s an even longer period of prosperity. Consider that the average unemployment (U3) rate since 2000 was 5.8 percent in Texas compared with 7.7 percent in California and 6.4 percent nationwide.

Perhaps more telling of the complete picture is the average underutilization(U6) rate, which includes the unemployed, underemployed, and discouraged workers. Given the data available since 2003, Texas averaged 10.5 percent while California averaged 14.3 percent and the United States averaged 11.6 percent.

And poverty is lower in Texas. The Census Bureau’s supplemental poverty index that adjusts for regional costs of living differences and government transfer payments places California’s 19 percent poverty rate the highest nationwide whereas Texas’ rate of 14.7 percent is near the U.S. average of 14.1 percent.

With a relatively light tax burden on employers in Texas compared with California, Texas’ employers have the freedom to innovate and grow. Although the current level of taxation is a stark departure from West Coast philosophy, Texans already see where improvement can be made as efforts to corral skyrocketing property taxes are underway to maintain their economic canter.

While taxes play a role in overall government intrusion, burdensome regulations do, too. The Texas Model, while still not free of all unnecessary regulation and corporate welfare, places more faith and decision-making in markets, where individuals — not politicians — decide the best way to satisfy their desires.

Consider the energy industry in Texas.

While the state has yet to completely eliminate its wind subsidies, it has, in general, taken a more moderated position on industry regulation than the California model. Instead of coercing consumers towards a source of energy favored by bureaucrats and politicians, Texas strengthens its power generation, reliability and cost efficiency by allowing consumers to access a wide energy portfolio.

As a result, Texans pay half the price for their electricity than their Californian counterparts, while also not having to contend with potential rolling blackouts whenever the sun doesn’t shine and the wind doesn’t blow.

While energy is just one example, the California Model’s policies highlight why the state has nearly 20 percent of its population in poverty. No matter how well-intentioned, when government entangles itself in the lives of individuals and tries to supersede other institutions that may be more effective, tribulation soon follows.

Will the nation follow California down a road to serfdom, or, more recently, follow Texas down a road to liberty? That question remains undecided.

But if the mass migration of individuals and businesses out of California and into Texas is any indication, the trend is clear that institutions matter. When institutions in civil society are strengthened by limiting government, people prosper.

Vance Ginn, Ph.D., is director of the Center for Economic Prosperity and senior economist. Elliott Raia is a research associate. Both work at the Texas Public Policy Foundation. Read the Foundation’s latest report for more.​

​In this Let People Prosper episode, I take a little more time than usual (hope you'll watch the entire episode) to share what economists like Adam Smith, David Ricardo, Daniel Hamermesh, Paul Krugman, and Milton Friedman said about international trade.

In this Let People Prosper episode, I provide today's press conference of the 18-member Conservative Texas Budget Coalition, with special thanks to Senator Donna Campbell for standing with us on these key legislative priorities, along with my explanation of the details of each of these priorities and how they work together to let people prosper.

​The Coalition outlined its legislative priorities for Texas' upcoming 2019 session. This includes the Conservative Texas Budget that sets limits for the 2020-21 budget of $156.5 billion in state (non-federal) funds and $234.1 billion in all funds to effectively limit spending so tax relief can be realized by all Texans. Read today's press release with quotes by each of the members of the Coalition.

This is important because spending trends since 2004 outlined in the Real Texas Budget show that Texas families of four are paying $1,000 more, on average, in state taxes than if the budget had just matched population growth and inflation.

Moreover, if the Texas Legislature can hold spending within a 4 percent growth limit this session and thereafter, Texas can eliminate the school maintenance and operations property tax--nearly half of the property tax burden statewide--within about 11 years. Read this for details of this simple property tax relief plan.

As noted on the Coalition's website, other legislative priorities includes strengthening government spending limits, eliminating the business margins tax, creating a tax relief fund, and increasing budget transparency to let people prosper.

In this Let People Prosper episode, I review my latest piece at the Institute for Family Studies on how the Texas Model supports prosperous families. There's plenty of data to review in the piece, but let's discuss how institutions matter, especially the institution that's one of the most fundamental to our flourishing: the family.

In this episode, I explore the following questions: What are claimed market failures? Do they exist? Can government intervention correct them? Is there such thing as government failure? It's important to ask these questions to determine whether or not market failure or government failure are the bigger problem in society. Much of this has do with the differences between Mainline Economics (my preference) and Mainstream Economics.

This enters controversial territory in economics and politics by discussing the myths of "market failure." Supposed market failures usually include problems with markets because of asymmetric information (occupational licensing and healthcare), monopolies (utilities and EpiPen), and externalities (pollutants) that can theoretically be corrected by government intervention.

However, I make the case that these issues in markets are generated by government intervention, not unhampered markets, and the introduction of government intrusion to attempt to correct these potential issues only expand government and make the problem worse.

Moreover, there are no free-market government solutions, which is why toxic pollutants should be dealt with by letting markets sufficiently price them or alternatively, though not recommended, by regulation. Policy solutions such as a carbon tax indirectly price externalities and the price will always be wrong because of the "knowledge problem" taught by economist Friedrich Hayek and the poor modeling that's done by so-called experts (see William Easterly's book The Tyranny of Experts). In general, the institutional structure of an economy should be supported by the government through upholding contracts, protecting people, and providing very few public goods.

Instead of resorting to government intervention to solve supposed market failures, we should first understand that the government is likely the problem and Let People Prosper by promoting institutions with strong private property rights and fewer barriers to entry and exit markets.

In this #LetPeopleProsper episode, I discuss the good, bad, and my take on the August jobs report by the U.S. Bureau of Labor Statistics. Overall, a good report but weaknesses remain.

Here are the key points of the report:

Nonfarm jobs: Up 201K last month, which was above expectations of 191K, but the prior two months were revised lower by a total of 50K. Manufacturing lost 3K jobs last month but are still up year-over-year, though this could be a signal of weaker growth due to foreign trade uncertainty.

Unemployment rate: Remains at 3.9%, lowest rate in almost 18 years. However, the last time the rate was this low was in December 2000 when the U6 unemployment rate, which includes underemployed and discouraged workers, was 6.9%, but that rate is now 7.4% though falling quickly in recent months. A better signal of the labor market's strength is the employment-population ratio for the prime age group (25-54 year olds) because it teases out the baby boomers retiring and young adults not entering the labor force as much as before. That rate ticked down to 79.3% from 79.5% and still has a bit to go to get back to the 80% rate before the Great Recession, though it too has been increasing rapidly in the last year or so.

Wages: Up by 2.9% in last twelve months and beating expectations of a 2.7% increase, though just keeping pace with measured price inflation so real wages haven't increased much. However, the pace of wage growth along with total compensation growth has helped consumer confidence reach near record highs. In addition, higher wages increase expectations that firms will raise prices to cover these higher costs of doing business, contributing to an expectation that the Federal Reserve will continue to raise the target for the federal funds rate, which I argue has already been too low for long so this is a good step.

In general, the increased strength of the labor market has been a product of the regulatory and tax relief last year. A good sign as the Trump administration has started to follow more of hte prosperous Texas model.

In this Let People Prosper episode, I'm interviewed by Josiah Neeley of R Street Institute and Doug McCullough of Lone Star Policy Institute on the Urbane Cowboys podcast about trade, NAFTA, Texas Model, and much more ("Ginn as in Gig").

In this Let People Prosper episode, I discuss the issue of occupational licensing how burdensome it is for many workers while many of the licenses provide little consumer protection from health, safety, and welfare concerns. This issue was in TPPF's daily newsletter "The Cannon," which I recommend that you subscribe.

In fact, licenses often result in being a barrier to entry for many people wanting to join a licensed occupation, creating a situation where there are costs to consumers, workers, and society at large. This makes licenses the most burdensome labor market regulation in spite of the reasoning for them being from a market failure of asymmetric information.

Often, market failures aren't failures at all but rather the resulting costs are from government failures, which another case for this is with occupational licensing. The case of Bastiat's teh seen versus the unssen.

Instead, more information to consumers and lower barriers to entry for workers would provide an efficient market that doesn't misallocate workers and cost consumers and society in the process.

I discuss recommended solutions that I mentioned in my recent testimony before the Texas Senate Business and Commerce Committee (watch my testimony here starting at 37:45 and read my written testimony here). There was a great discussion among the panelists and legislators about occupational licensing and what you should be done about them.

In this Let People Prosper episode, I discuss how property taxes continue to skyrocket in Texas and highlight options that would provide property tax relief. The key to any long-term tax relief is to limit government spending so that the burden of government can be reduced.

​The result of taxing something is that you will get less of it. That's simple, correct? But the details of how to best collect taxpayer dollars to fund limited roles for government gets complicated. I try to break this down simply at the video above.

According to the Texas Comptroller, property taxes and sales taxes are both regressive. Any time you have a flat tax rate, higher income people will pay a lower share of their income on taxes than lower income people. But the costs of property taxes are substantial, with businesses and individuals each paying about half for school M&O property taxes. Sales taxes, on the other hand, allow people the freedom to decide how to spend their money, don not have to tax real estate (capital formation and accumulation--keys to wealth of nations), and are transparent. Individuals pay about 60% of sales taxes collected while businesses submit about 40%, but we know that businesses don't ultimately pay taxes because they just pass those costs along to consumers (us) in the form of higher prices, lower wages, and fewer jobs available over time.

As noted in previous episodes, I have long supported the elimination of property taxes in Texas. There are multiple ways to do so by possibly swapping them (sales tax rates are lower now because of expanded economic growth since these rates were calculated) with a reformed sales tax and/or buying them down permanently over time. The key is to limit government spending so that the burden of government can be reduced. ​

We know that sin taxes (e.g. carbon tax or cigarette tax) or tariffs are poor forms of taxation. Income taxes are also a terrible form of taxation. Check out the table below that provides information for the 9 states without a personal income tax and the 9 states with the highest personal income tax rates. Those states without a personal income tax blow the others out of the water regarding multiple economic indicators.

Of course, the key is limiting spending. Let's move to a tax system with just a sales tax for more economic prosperity, which eliminating the school M&O property tax would be a great start.

In this episode, I discuss today's decision by the San Antonio City Council with a 9-2 vote to pass a city ordinance mandating private businesses provide paid sick leave of 64 hours for those with more than 15 employees and of 48 hours for those with 15 or fewer employees.

As I noted in a previous blog post, this sort of forced activity by government is bad for employers (raises costs), bad for employees (reduces negotiating power), bad for consumers (increases prices), and bad for the Texas economy (less economic activity).

Instead, San Antonio and Austin, which passed this ordinance earlier this year, should find ways to provide a pro-growth economic framework to let people prosper instead of making people poor while likely violating state law (Texas Minimum Wage Act).

In this episode, I talk with Jonathan Williams, Chief Economist of the American Legislative Exchange Council (see full bio here), about the positive economic effects of the recent Tax Cuts & Jobs Act along with how the Texas Model works well but should be improved.

Don't miss his latest Rich States, Poor States publication that gives an economic outlook for each state and then ranks them. Here is the recent commentary I co-authored with Jonathon on not believing the hype about a carbon tax.

Check out more of his work and more of the fantastic information at ALEC at the website www.alec.org.

​In this episode, I have a conversation with Dr. Brandon Logan, who is the Director of the Center for Families & Children at the Texas Public Policy Foundation, about his fantastic work in helping kids and families prosper more throughout their lives.

The most essential institution is the family, and with government crowding out many of a family's basic functions, civil society suffers. By letting people prosper through limited government, whereby parents have the freedom to raise their child as they see fit without abuse, families can have the best opportunities to flourish.

Here's more on Dr. Logan: Before joining the Foundation, Brandon represented hundreds of children as attorney and guardian in child welfare courts throughout Texas. He is certified as a Child Welfare Law Specialist by the National Association of Counsel for Children. Brandon has also represented parents, grandparents, and foster families in custody and adoption cases across the state.

Brandon earned his undergraduate degree from Texas A&M University. He holds a law degree and doctorate in human development and family studies from Texas Tech University, where he also taught courses in child welfare policy and family dynamics. His academic work includes child maltreatment, abuse trauma and treatment, and family and father engagement.

Brandon and his wife, Mindy, were raised in the same small West Texas town and are blessed with five young children – four boys and a baby girl.

There is a clear path to more economic growth, job creation, and resulting prosperity: capitalism without government barriers to opportunity.

In other words, the federal government should uphold contracts through a justice system, provide a national defense, and deal with international commerce, but really not much more than that.

Let people prosper by letting them satisfy their desires within institutions of civil society that are the backbone of America's strength. Unfortunately, too many of those institutions are hindered because of excessive government intervention at every level.

In this episode (YouTube channel Vance Ginn Economics), I explain how institutions matter from an economic, social, and political perspective. This episode is longer than usual (30 minutes) to go through these institutions and explain how the Texas Model supports prosperity while highlighting how it could be improved by limiting spending and eliminating property taxes--starting with school property taxes.

Given how federal institutions have failed for so long, though they are improving now, there is a need to look at the states.

A good comparison is the largest four states in terms of economic output and population of California, Texas, New York, and Florida. These states have very different institutions, whereby Texas and Florida have primarily inclusive (liberty-related) institutions and California and New York have primarily extractive (redistributionary) institutions. The economic results from these are clear over the last decade-plus with Texas and Florida leading the way in most economic indicators, even when considering income inequality and poverty.

I highlight how the Texas Model has led the way in terms of prosperity, but there is more that needs to be done, specifically limiting state and local government spending. Specifically, there is no education spending problem in Texas, as noted by data from the Texas Education Agency, and the state share of education spending hasn't declined. So, the state spending more, as education lobbyists request, will not lower property taxes.

I then go through the option of eliminating school maintenance & operations property taxes over 11 years by limiting spending and using state surplus dollars to permanently buy school property taxes down until they are eliminated. As often asked at these events, I also briefly discuss the option of swapping school property taxes with a sales tax that has a broader base so the rate doesn't increase much if at all then cut taxes with surpluses dollars thereafter.

I discuss other ways to improve the Texas Model as well, such as passing a stronger state spending limit and eliminating the business margins tax. These steps will allow Texas to be even more prosperous by getting government out of the way with an institutional framework that support entrepreneurial activity and human flourishing today and far into the future.

Thank you for watching! Please share as you see fit. Have a prosperous day!

In this episode of the Let People Prosper series, I discuss the economic freedom associated with the Texas Model, which is based on relatively less government spending and taxation along with sensible regulations.

I examine data for more than a decade along with the latest state-level jobs report to highlight how the Texas Model has supported abundant prosperity. Of course, Texas has room for improvement, such as limiting government spending and eliminating property taxes, but there's much Texas gets correct.

But the big news today was the Texas Comptroller Glenn Hegar revising the Certification Revenue Estimate substantially up for the current 2018-19 budget period, such that instead of a $94 million surplus at the end of FY 2019 there is now an expected $2.67 billion surplus. This is one of the many benefits of the Texas Legislature passing conservative budgets to keep taxes lower than otherwise during the last 2 sessions resulting in faster economic growth and even more tax revenue. While many people will want to spend this additional taxpayer money, and there will likely be a need for a supplemental bill to fund expenditures above appropriations from last session for the $1.8 billion delayed funding to the State Highway Fund and some amount for Medicaid, the focus should be on sustaining a conservative budget and prioritizing extra dollars for tax relief. Options could be to buy down the school M&O property tax over time until it is eliminated or even cutting the business margins tax until elimination.

​More money in the hands of Texans in the productive private sector is how people become more prosperous while government simply functions to preserve liberty.

The Military Order of the World Wars approached the Texas Public Policy Foundation in 2014 about having someone present on the benefits of a free enterprise system at their Southwest Youth Leadership Conference aboard the U.S.S. Lexington in Corpus Christi. I have presented to many top-notch, high school students from across Texas each summer since then to discuss the importance of the free enterprise system, especially how it relates to the labor market with the use of a minimum wage game (spreadsheet for the game here).

Watch the video above of the presentation in 2016, which provides further explanation of the game and shows the wage negotiations between students.

The game has been expanded upon over time since first created with Dr. Mark Frank while we both taught at Sam Houston State University. The game is composed of multiple sessions where some of the students are employers and others are workers.

Students learn how a labor market works through negotiations between employers and workers in a free enterprise system and in a system with a government-mandated minimum wage. The game shows that although there’s a higher average wage in a system with a minimum wage, there is also higher unemployment, especially for low-skilled workers that the government is trying to help. Students learn how workers are best able to demand a higher wage with less unemployment by increasing their productivity through education, technical skills, and on-the-job training, which access can be limited when there is a minimum wage.

Ultimately, the game helps students to start thinking like an economist when considering how the free enterprise system works and how government intervention will distort those outcomes. It’s fantastic to see the light bulbs start turning on throughout the game as students realize the costs of a minimum wage.

For the last three years, I've worked with SMU's O’Neil Center for Global Markets and Freedom to present my unit in their series “Teaching Free Enterprise in Texas” that teaches high school teachers in Texas about key economic principles. This series of publications are compliant with Texas' TEKS (state standards) and include the benefits of the free enterprise system with regards to international trade, fiscal policy, and other important areas. My unit on “Labor Market Economics” includes the minimum wage game that I've presented to hundreds of public school teachers statewide.

​The best path to prosperity is through free enterprise, individual liberty, and personal responsibility—the pillars of improving everyone’s well-being that we promote at the Texas Public Policy Foundation. Unfortunately, these are concepts that many students never learn. With the Foundation’s outreach to high school students on these important principles, there’s a better chance that many will think like an economist and help provide a brighter future for all.

​While some say that if we have a trade deficit we win or if we have a trade surplus we lose, that's the wrong way to think about trade when everyone benefits from the exchanges that result in higher productivity and lower prices. Watch to learn more. Read my paper when you have a chance as well.

The result of taxing something is that you will get less of it. That's simple, correct? But the details of how to best collect taxpayer dollars to fund limited roles for government gets complicated. I try to break this down simply at the video above.

According to the Texas Comptroller, property taxes and sales taxes are both regressive. Any time you have a flat tax rate, higher income people will pay a lower share of their income on taxes than lower income people. But the costs of property taxes are substantial, with businesses and individuals each paying about half for school M&O property taxes. Sales taxes, on the other hand, allow people the freedom to decide how to spend their money, don not have to tax real estate (capital formation and accumulation--keys to wealth of nations), and are transparent. Individuals pay about 60% of sales taxes collected while businesses submit about 40%, but we know that businesses don't ultimately pay taxes because they just pass those costs along to consumers (us) in the form of higher prices, lower wages, and fewer jobs available over time.

As noted in Episode 8, I have long supported the elimination of property taxes in Texas. There are multiple ways to do so by possibly swapping them (sales tax rates are lower now because of expanded economic growth since these rates were calculated) with a reformed sales tax and/or buying them down over time. The key is to limit government spending so that the burden of government can be reduced. ​

We know that sin taxes (e.g. carbon tax or cigarette tax) or tariffs are poor forms of taxation. Income taxes are also a terrible form of taxation. Check out the table below that provides information for the 9 states without a personal income tax and the 9 states with the highest personal income tax rates. Those states without a personal income tax blow the others out of the water regarding multiple economic indicators.

Of course, the key is limiting spending. Let's move to a tax system with just a sales tax for more economic prosperity.​

Vance Ginn, Ph.D.​#LetPeopleProsper

I'm a free market economist based on the teachings of Chicago and Austrian schools of economics. I'm a classical liberal with interest in removing government barriers to competition to let people prosper. I grew up in Houston, Texas where I was a hard rock drummer who went on to be a first generation college graduate from Texas Tech University. I'm a recovering academic who now works at the Texas Public Policy Foundation in Austin.